<![CDATA[Purpose—This paper examines the impact of various environmental factors on the performance of banks in Nigeria. Specifically, the study analyzes how exchange rates, GDP growth, government expenditures, and interest rates influence the performance of selected Deposit Money Banks (DMBs) in Nigeria. Design/methodology/approach—The study uses annual data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the annual reports and accounts of 12 randomly selected DMBs for the period from 2009 to 2018. The Panel Generalized Method of Moments (GMM) approach is employed to estimate the relationships between environmental factors and bank performance. Findings — The research finds that GDP growth, interest rates, and government expenditure all have a positive and significant impact on the performance of banks. Among these factors, government expenditure has the most substantial effect on the earnings per share (EPS) of the selected banks. Practical implications — Based on the findings, it is recommended that banks should manage their interest rates creatively within legal constraints to enhance performance. Banks should also pay close attention to government fiscal policies, especially expenditures, and incorporate these into their strategic decision-making. Additionally, banks are encouraged to develop policies, products, and services that support economic growth in Nigeria, potentially through development finance initiatives. Originality/value—This study uses a robust panel data approach to provide valuable insights into how environmental factors affect bank performance in Nigeria. By highlighting the significant role of government expenditures and other factors, it offers practical recommendations for banks to improve their performance and align their strategies with macroeconomic conditions. This research contributes to understanding banking performance in emerging economies, particularly within the context of Nigeria.]]>
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